In a significant victory for property owners, the Texas Supreme Court has ruled that § 25.25(c), Tax Code, motion to correct the appraisal roll is not precluded by a prior unsuccessful ARB protest.
J-W Power Company v. Sterling County Appraisal District (No. 22-0974) consolidated with J-W Power Company v. Irion Appraisal District (No. 22-0975; June 7, 2024) arose from the taxpayer’s Chapter 41, Tax Code, protests of the appraisal districts’ treatment of its inventory of leased heavy equipment under §§ 23.1241 and 23.1242, Tax Code, which the Legislature enacted in 2011. The appraisal districts appraised natural gas compressors based on their situs in the county, rather, as the statute requires, in the county of their origin. Subsequent to the enactment of the statute, SCOTX decided EXLP Leasing, LLC v. Galveston Cent. Appraisal Dist., 554 S.W.3d 572 (Tex. 2018), which affirmed the constitutionality of the statutory situs rule and appraisal methodology. Prior to that, however, ARBs in Sterling and Irion Counties denied the taxpayer’s protests, and the taxpayer did not seek judicial review. Instead, after EXLP Leasingcame down, the taxpayer filed § 25.25(c), Tax Code, motions to correct the appraisal roll, which the ARBs likewise denied. The taxpayer appealed, but the district court granted summary judgment in favor of the appraisal districts. The Austin Court of Appeals affirmed, holding that res judicata precluded the taxpayer’s § 25.25(c) motions because the ARB had previously rejected virtually identical protests. The taxpayer sought review.
In an opinion by Justice Blacklock, SCOTX reversed and remanded to the court of appeals. Setting aside the question of whether the outcome of an ARB proceeding can even have res judicata effect, the Court rather resolved the case on the basis of the statute alone. Section 25.25(l), Tax Code, provides that a 25.25(c) motion to correct the appraisal roll may be filed “regardless of whether, for a tax year to which the motion relates, the owner of the property protested under Chapter 41 an action relating to the value of the property that is the subject of the motion.” The appraisal districts argued that § 25.25(l) doesn’t apply unless the taxpayer’s ARB protests “related to the value of the property.” In other words, “only Chapter 41 protests contesting the calculation of the property’s appraised value” meet that standard. Rejecting this argument, the Court pointed out that § 25.25(l) applies regardless of whether the Chapter 41 protest contests the value of the property. In fact, the Court opined, § 25.25(c) is available to taxpayers if they filed any kind of Chapter 41 protest or no Chapter 41 protest at all.
The Court declined to express a view on the merits. Instead, it sent the case back to the court of appeals for consideration of the appraisal districts’ other arguments in their summary judgment motion. In any event, this is an important decision that construes § 25.25(l), in our view, exactly the way the Legislature wrote it. As Justice Blacklock rightfully observed, “the Legislature has, by enacting section 25.25(l), given greater priority to the taxpayer’s interest in accurate appraisal records than to the appraisal district’s interest in avoiding potentially duplicative proceedings.”
